SEC Approves Cboe Listing Proposal for 3x Leveraged Crypto ETPs

On Oct. 2, the SEC approved the Cboe BZX exchange’s listing proposal for VS Trust’s 3x Bitcoin ETF and 3x Ether ETF. The decision clears an exchange-rule hurdle for products sponsored by Volatility Shares that seek amplified daily crypto futures exposure.

The order covers six funds, including products tied to gold, silver, crude oil and natural gas. It advances the proposal CryptoSlate covered in August, when the exchange was still seeking permission.

For brokerage investors, the change opens a listing path for a higher daily leverage target. Cboe’s generic commodity-trust standards exclude products that seek specified multiples of a benchmark, so these funds needed individual approval. Their other initial and continuing listing requirements still apply.

VS Trust’s Aug. 17 preliminary prospectus lists BITH for the Bitcoin product and ETHK for the Ether product. Those are proposed symbols in a filing marked subject to completion. The prospectus says securities cannot be sold until registration becomes effective.

The October order approves the exchange’s rule change; it does not establish that registration is effective or that trading has begun. Registration effectiveness and a first trading date remain unconfirmed as of Oct. 4. Investors therefore cannot treat this decision alone as confirmation that the products are available through their brokers.

Although “ETF” appears in their names, the order classifies the funds as exchange-traded products, or ETPs, structured as Commodity-Based Trust Shares. They do not have the investor protections associated with funds registered under the Investment Company Act of 1940.

What the daily 3x target means

Each crypto product seeks three times its benchmark’s daily performance before fees and expenses. The benchmarks measure portfolios of first- and second-month futures contracts, with the funds using futures alongside cash collateral. That makes the reference point a futures portfolio’s daily return, rather than the spot price alone.

The preliminary prospectus defines a day as the interval between successive net asset value calculations. Under normal circumstances, the funds seek to rebalance daily. Each day’s result then compounds from a changed asset value, so the sequence of gains and losses matters to a longer holding period.

The SEC’s investor bulletin warns that daily leveraged products can depart substantially from their stated multiple over weeks or months, especially in volatile markets. The prospectus likewise warns that longer-period returns may differ in magnitude and even direction. A 3x daily objective therefore does not promise triple Bitcoin or Ether’s cumulative return.

Leverage also amplifies losses. SEC staff specifically warn that ETFs using leveraged Bitcoin-futures strategies increase volatility and can expose investors to significant, sudden losses.